Are you looking to flip a piece of real estate after renovating it, but you have found you need extra funds to get the job done? Do you need extra cash for an emergency but have a few potholes on your credit report that might cause you to get denied through traditional lenders? There are also plenty of other good reasons to consider working with a local hard money lender. A hard money loan is a bit different than the type of loan you might get through a traditional bank. Here's why this specific type of loan might be a good fit for you.
Get a Loan with Bad Credit By Using Collateral
A hard money lender doesn't care too much about your credit report. They offer you money based on the value of the collateral that you put up to back the loan. Collateral for hard money loans is most often real estate, but it could also be another type of significant property, such as a car. The lender will give you the loan at a specific interest rate while you agree to forfeit the collateral to the lender if you default on the loan. Of course, this type of loan will come as a bigger risk, but it's a viable way to get a quick influx of cash if you can't get what you need through other methods.
Get a Loan Faster Than You Could Through a Traditional Bank
The traditional banking system can sometimes have a lot of red tape. They will probably want to analyze your credit history in detail before approving you for a significant loan. A hard money lender is typically a private company, for example, Chaja Properties, Inc., or they can be an individual. However, they are not considered a bank. This kind of lender has the ability to move more quickly, allowing you to get your funds as soon as you sign off on your collateral.
Your Interest Rate or Other Terms May Be Open to Negotiation
When you work with a bank or a traditional lender, they will typically set the interest rate, and whatever they say is what you will get. There's very little-to-no room for negotiation in other words. Because a hard money lender is not a bank but a private business, they are sometimes open to negotiating the interest rate or the loan term based on the value of the collateral you are putting up to back the loan. It's true that hard money loans will typically have a high-interest rate, but also consider that the loan term might be quite short and that you might be able to negotiate some savings if you agree to pay it back relatively quickly.Share
2 July 2021
I always wanted to buy my own home and after saving enough money for a down payment, I decided that it was time. Before I started looking at houses, I talked with a loan officer about financing. I wanted to know how much money I could borrow so I could look at houses in that price range. I was very happy after my meeting at the loan company and I was ready to start house hunting. My name is Jarod Spangler and I'm now a homeowner. If you have the dream of owning your own home, I think you'll find my blog of help to you. I've documented my journey of saving money, securing a loan and purchasing a house. To help you become a homeowner too, I'm offering advice and tips of things that I've learned along the way.